Forging new paths

August 15, 2016

Our investment team combines a steady hand with creativity and innovation to deliver returns for the long term. 

We have more than 10,000 investments around the world and across a multitude of sectors to ensure we can pay your, and future generations of teachers’ pensions. Managing this portfolio means we have to stay on top of emerging trends, while maintaining a steady hand.

Recent global turmoil, like Brexit, has highlighted this need to maintain stability while seeking growth opportunities.

“We look forward to working with our existing companies in the UK, and on new opportunities through our London team, which will continue to co-ordinate our investment execution for Europe, the Middle East and Africa,” said Bjarne Graven-Larsen, Chief Investment Officer.

We meet our fiduciary duty to you by striking a balance between steady returns from investments such as government bonds, and seeking higher rates of returns through innovative investments such as the ones outlined below.

Here are three recent examples of investments that illustrate how being actively engaged, integrating environmental, social and governance risk assessments and diversifying across sectors and regions helps to provide a solid foundation for your pension plan.

What’s the connection between healthy eating trends and a healthy pension?

Broad societal trends, like healthier diets offer investment opportunities.

Aroona Farms is one of Australia’s largest growers of almonds, which are a great source of vitamins and minerals and have been shown to reduce the risk of heart disease. Aroona’s almonds are enjoyed worldwide on their own, added to mixed nut products, and used in granola bars and other healthy snacks.

We invested in Aroona in 2014 (the same year it was created) and own a 99% stake. The company has 20 full-time employees between its main offices in Adelaide and two farms in Victoria and South Australia. The operation consists of 590,000 trees, covering about 20 square kilometres.

Aroona monitors water use and soil moisture levels in real time to maximize water efficiency, using a sophisticated system that is controlled electronically.

How does apparel contribute to the sustainability of my pension plan?

In 2012 we acquired a majority ownership stake in Helly Hansen Group AS. Based in Oslo, Norway, Helly Hansen designs, develops and markets high-performance (and stylish) outdoor apparel.

Since acquiring our stake, we’ve worked with the company to revamp its management and re-focus its product lines.

In 2015, Helly Hansen posted a 66% increase in earnings on a 20% increase in revenue.

Paul Stoneman, Helly Hansen’s CEO, told the Financial Times that he attributes a large part of this growth in earnings to our active ownership. “They don’t have the funding pressure of private equity firms but they do have the discipline of private equity investing. That was a healthy balance.”

How does paying a toll in Mexico help pay my pension?

Infrastructure investments tend to have low return volatility over the long term. We recognized an opportunity to develop new partnerships and enhance our presence in Latin America by investing in a Mexican toll highway.

The Arco Norte is a 223-kilometre toll road that curves around the northern border of Mexico City.

We partnered with the Canada Pension Plan Investment Board (CPPIB) and IDEAL, a Mexican investment firm. With CPPIB, we contributed $1.35 billion to obtain a 49% stake together in Arco Norte from IDEAL, which held 99% ownership. The transaction is subject to customary closing conditions.

We recognize there may be significant social and governance risks when investing in emerging markets, like Mexico. Our due diligence work includes identifying mitigating factors to make us comfortable with the risks we are undertaking. Our legal team worked closely with the deal team and our future investment partners to ensure our investment is protected from reputational and legal risks.

“Arco Norte is an attractive asset with long-term growth potential that will provide stable income to pay pensions,” said Andrew Claerhout, Senior Vice-President, Infrastructure and Natural Resources.

Watch members of our team discuss the Arco Norte deal: